MBS Day Ahead: When it Comes to Holding Recent Gains, What Would Failure Look Like?


Posted To: MBS Commentary

In the day just passed, the bond market spent a 3rd straight day collecting treasure. For our purposes, "treasure" refers to the newfound, unexpected, and fairly massive gains courtesy of a rapid snowball move across multiple asset classes in response to major instances of trade war escalation. Last Thursday, it was Trump's tweets that marked the start of the trip. Friday was mostly an afterthought, but still notable in the sense that bonds improved further with no new motivation. Yesterday brought China's major retaliatory move with a massive weakening of its currency courtesy of its central bank, and another acceleration of the already impressive bond buying spree. In the day ahead, the bond market will keep a close eye on its newly acquired Treasure. Such an impressive…(read more)

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